Can my employer bring me back from a COVID-19 layoff at less pay until sales improve?

Pay cut until sales improve

Yes, an employer can bring back an employee from a COVID-19 layoff at reduced pay until sales pick up again, but only if an employee is willing to accept these changes.

An employee does not have to accept a reduction in pay, as it may be a considerable change to the terms of their employment. These changes in pay may constitute a constructive dismissal, where the worker can treat their job as being terminated and receive severance pay.

In general, when an employee is recalled from a temporary layoff, they have the right to expect that the same position, and the same rate of pay, is still available to them. An employer does not have the right to create significant changes to an employee’s job, for example, by reducing their pay or duties. The employer has an obligation to recall the employee to the same position from which the employee was laid off.

Agreeing to a temporary pay cut

If an employee agrees to a temporary reduction in their pay, either in writing or by going along with it, then an employer can reduce an employee’s pay either permanently or temporarily until sales pick up again. This brings up the issue of what constitutes a ‘pick up’ in sales.

In such a case, the employer and employee need to agree on a specific date that the reduction in pay will end, otherwise a ‘return to normal’ for sales might never occur. If this happens the employee’s pay may stay at a reduced rate indefinitely.

Factors that may affect a constructive dismissal claim

A constructive dismissal can be found any time a material change occurs to an employee’s job duties, compensation, or hours of work.

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• Watch: Temporary Layoffs During COVID-19
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Whether an employee’s reduction in pay following the employee’s return from a COVID-19 layoff is a constructive dismissal can depend on a number of factors.

These include:

• Whether the employee agreed to the reduction in pay;
• How much the employee’s pay has been reduced;
• If a date was provided that the employee’s pay will return to their full wages; and,
• Whether their employment contract contained any provisions that would permit the changes

How much does my pay have to be cut in order to trigger a constructive dismissal?

In instances where there is only a slight reduction in pay, it is unlikely to result in a successful claim for constructive dismissal.  While there is no rule on how much of a reduction is too much, courts in Canada have been hesitant to find a constructive dismissal based only on a reduction in an employee’s pay where the reduction in pay is less than 10%.

The role of employment contracts

In general, the employee–employer relationship is primarily governed by the employment contract, and where no employment contract exists, the relationship is governed by provincial employment legislation and common law.  Your employer may have tried to implement a temporary reduction in pay, citing the employment contract.

Discover your rights

It is important to speak to an employment lawyer if your employer decides to significantly slash your pay without your approval. Our team has helped thousands of individuals in Ontario, Alberta and British Columbia (before and during the pandemic) enforce their rights and secure the compensation they are owed when their pay is cut.